Under the terms of the US Code and US Constitution - the underlying principles upon which US laws are constructed - federal courts can issue judgments in 'supplementary jurisdiction' if claims made in cases "are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy". Courts can decide not to exercise their supplemental jurisdiction rights "in exceptional circumstances, [if] there are other compelling reasons for declining jurisdiction".
Levi Strauss & Co had argued that Papikian Enterprises had violated the EU's Trade Mark Directive by buying Levi trade marked goods outside the EU and selling them to individuals and third parties within the territory without its consent. Levi also asserted a number of claims against Papikian under US federal and state law to a Californian district court.
Under the provisions of the Directive trade mark proprietors are entitled to prevent third parties using similar or identical signs to the trade mark for similar or identical purposes for what the trade mark is registered for if there is a "likelihood of confusion on the part of the public".
The Directive also provides that EU countries can write national laws giving extra protection to trade mark proprietors who possess a reputation in that country if others' use of similar or identical signs for similar or identical purposes "takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".
Trade mark proprietors can not prevent others using their trade mark "in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent" unless there are "legitimate reasons ... to oppose further commercialisation of the goods", the Directive provides.
The US judge said that the court would not deal with Levi's claims under EU law as Levi had failed to provide adequate reasons why the matters should be dealt with by the US court and not in the courts of the relevant EU member states. .
The US and all EU members, including the UK, are members of a number of international treaties, including the World Trade Organisations' TRIPS (Trade Related aspects of Intellectual Property Rights) agreement. The agreement sets out international standards that signatories must abide by on the enforcement of Intellectual Property rights.
"These treaties provide for the independence of those countries who have issued European marks to LS&Co. to adjudicate LS&Co.’s rights under those marks," the judge said in his ruling (18-page / 66KB PDF).
The judge said that he assessed whether he should rule on the EU trade mark claims based on the 'comity doctrine' – the doctrine for determining the rights and competencies of other jurisdictions. He said that EU courts were better placed to make rulings on Levi's trade mark protection in that geographic area.
"LS&Co. does not suggest that this Court has a duty to adjudicate its foreign law claims, that foreign courts would inadequately protect its trademark rights, or that foreign courts are willing to have United States courts exercise jurisdiction over their trademarks," the judge said in his ruling.
"Furthermore, LS&Co. has not convinced this Court that exercising supplemental jurisdiction over this claim would not prejudice the rights of European governments," the judge said.
Judge Jeffrey White also said that it was not "in the interests of judicial economy" to further examine the EU law claims, but said that it was for other courts to determine whether individual cases like this should be decided upon.
"Although the Court’s opinion should not be construed to mean that it would decline to exercise supplemental jurisdiction over every case involving foreign trademarks, the Court finds based on the record in this case, there are compelling reasons to decline to exercise supplemental jurisdiction over LS&Co’s [EU trademark] claim[s] for relief," the judge said.
The judge ruled not to issue summary judgment as requested by Papikian on other aspects of the case. Levi allege that the trader has violated US federal and state laws on trade mark infringement, trade mark dilution, unfair competiton and cybersquatting.